The Israel Tax Authority (ITA) said the two men, David Vardi and Gilad Halachmi, were subsequently released from custody under certain restrictions.

Officials stopped Halachmi after he tried to pass through customs without declaring anything and found rough diamonds in his pockets which were brought in from Zimbabwe.

Spokespersons for ITA stressed that Halachmi is neither a member of the Israeli Diamond Exchange (IDE) nor is he involved in the diamond trade.

Rather, he is employed as a water consultant in Zimbabwe and smuggled the goods, without Kimberley Process certification, on behalf of Vardi.

The ITA reported that Halachmi claimed he was not told by Vardi that he should declare the goods at customs, only that he must hand the stones to a representative who would meet him at the arrivals hall.

Vardi was subsequently brought in for questioning where he confirmed that he requested Halachmi to bring in the diamonds, which he procured from a Lebanese diamond merchant while visiting Zimbabwe.

Vardi confirmed the stones were worth $140,000 and that they did not have Kimberley process certification.

Zimbabwe is in negotiations with the Kimberley Process to certify production from its Marange fields.

Management of the IDE are scheduled to meet Monday morning to discuss what action to take regarding the case.